It is important that we are having this debate today in view of the recent and very regular examples of price volatility in the dairy industry. It is right that the Rural Affairs, Climate Change and Environment Committee held its inquiry and wrote to the Cabinet Secretary for Rural Affairs, Food and Environment on the matter. It is absolutely essential that the Scottish Government’s “Dairy Action Plan”, which the cabinet secretary acknowledges was partly in response to the committee inquiry, is robustly implemented.
I met dairy farmers who supply Graham’s Family Dairy at the Lanark auction mart last week. They were representing family farms on marginal land, which are really up against it in the present climate, in spite of the Graham’s ethos and the top farm-gate price.
I was heartened to see from the plan’s “Promoting best practice in dairy farming” section that there is an intention to
“Give priority access to the dairy sector to whole farm reviews and the new SRDP advisory services and actively encourage farmer uptake.”
How will the Scottish Government make that known to dairy farmers?
Also in that section of the action plan, we hear that the Scottish Government
“will continue to support the new Dairy Hub”,
as the cabinet secretary mentioned today. I wonder whether the cabinet secretary might give more detail in his closing remarks about whether that work will be regional or central, and how it will be advertised again.
The need to alter power structures is, in my view, at the heart of the development of a sustainable dairy industry, with a fair farm-gate price in the future. Producer organisations could have a significant role to play in the future. As a member of the Scottish Co-operative Party group of MSPs, I am eager to highlight some issues here.
The Scottish Agricultural Organisation Society works hard to promote Scottish farmers and to strengthen the sustainability and competitiveness of the food-and-drink and other rural industries through co-operative principles. Owned by and working for its membership, SAOS is a strong example of supportive and advisory infrastructure for agricultural and co-operative development.
In January this year, the Milk Supply Association began operations as an independent producer association. With the assistance of SAOS, the association’s members represent 80 per cent of milk supplied to the processor companies, the Fresh Milk Company and the Caledonian Cheese Company. With SAOS’s help, processors and producers are able to enjoy closer working relationships and can commit to transparent and fair milk pricing processes.
In several EU countries, agricultural co-operatives dominate, with average market shares exceeding 50 per cent, whereas in the UK the figure currently sits at 25 per cent. That has been identified as an opportunity for expansion.
Arla Foods, which is a Denmark-based company as we know, now has Dairy UK membership and has become one of the largest UK milk processors. In 2012, Arla’s throughput was 15 times that of First Milk. Ventures of that scale provide financial gain. They also bring knowledge and market access, as well as demonstrating the huge benefits in co-operative agri-businesses that are waiting to be secured.
As our convener has stressed, the committee was disappointed by some of the evidence from First Milk. Along with the rest of the committee, I will be sure to see how developments can be taken forward quickly, with a new chief executive officer in charge and a new plan.
I was frankly disappointed—I found it unacceptable and profoundly unhelpful—that some supermarkets thought it appropriate not to co-operate with the RACCE Committee in the first instance, although the Co-operative Group, Aldi and Waitrose agreed to take part—Waitrose via a videolink—and they were positive from the start.
The impression that was given by others was that some supermarkets thought that they were a law unto themselves. It showed a very negative approach at a time of crisis for producers that those supermarkets declined to come before us in the first instance.
Moving on, some of what transpired in the evidence sessions on the part of the supermarkets was actually positive. I believe that the whole inquiry process has perhaps sent some messages to them about working more closely and transparently throughout the dairy chain.
In relation to the support by supermarkets for local Scottish dairy products, as other members have said, consumers cannot buy if they do not see; the products have to be on the shelves. It is right that the Scottish Government has included in its timeline, for July,
“Engage with the Grocery Code Adjudicator”.
There is an issue about whether the remit of the adjudicator might be extended to go further down, to the producer, although I appreciate that it is a complex issue.
Public procurement is also a significant issue. I ask the cabinet secretary to give more details of and support for an expectation of purchase of local and Scottish produce. For instance, as a very new young—Young? Excuse me, Presiding Officer. That is a Freudian slip. As a very new gran, I question why milk is not a daily menu option in Wishaw general hospital.
As for new products more generally, which were highlighted in our committee evidence sessions, in this year of food and drink I asked the cabinet secretary a question in January about niche markets. I sought reassurance about the initiatives that the Scottish Government and, importantly, Scotland Food and Drink are taking to support those markets, such as Lanarkshire blue and Loch Arthur cheeses, and many others across Scotland.
Working in partnership, we must ensure that there is support for new initiatives. As other members have said, the committee inquiry has helped to focus on that urgency. I am delighted that the dairy plan includes the launch of the Scottish dairy brand in October, and I would encourage all those along the supply chain actively to take part.
I understand that the farm-gate price for the organic dairy sector has held up well but that that could be due to some organic farmers going out of business rather than expansion. Will the cabinet secretary tell members what is being done to support organic farmers? That is a niche market that could be taken forward, and I have not seen reference to it in the dairy plan.
As other members have said, exports are a strong part of the picture. I hope that the cabinet secretary will say something further about specific support through Scottish Development International. I wonder about the price of the products on shelves abroad; surely transport is one of the things that puts up the price.
As we have heard, more capacity is needed in processing initiatives. In a press release this week, NFUS has stated:
“Work to progress a Scottish dairy brand must be underpinned by investment in processing capacity in Scotland so that we have the ability to produce both commodity and added value goods from Scottish milk closer to our own milk fields.”
Like many other members, I am delighted to hear the announcement from Graham’s. This is also a carbon miles issue. In response to the relevant part of the dairy plan, NFUS’s milk committee chairman commented:
“The Scottish Government’s intention to actively encourage investment in new and diverse processing must bring speedy results.”
It was disappointing, therefore, to see that the Scottish Government’s proposal in the dairy plan to encourage new investment in processing capacity is for December, although the cabinet secretary has acknowledged today that discussions will be on-going.